The divorce process in Texas involves navigating the state’s unique legal frameworks, particularly in terms of dividing assets and debts under community property laws. There could be questions you’re eager to find answers to while processing your divorce papers.

This process spans from the initial filing of a petition to the final divorce decree. It varies depending on whether the divorce is contested or uncontested, the grounds for divorce, and how assets and debts are divided.

At C.E. Borman, our Bryan, Texas, divorce attorneys have successfully guided numerous clients through the complexities of dividing assets and debts during divorce. Under the leadership of Channa Borman, we are committed to alleviating the stress clients may face throughout the process, ensuring that their rights are protected and that they are well-informed about their legal choices regarding divorce.

How Do Texas Courts Divide Assets and Debts in Divorce?

If a couple is unable to reach an agreement on how to divide their property and debts, the court will determine the final division of these assets and liabilities.

In Texas, debt division is governed by Section 7.001 of the Texas Family Code, which adheres to the principles of community. This legislation strives for a fair distribution of debts, taking into account the specific circumstances of each spouse, though this does not always result in an equal split.

Moreover, Texas law considers the distribution of all debts accrued during the marriage as shared responsibilities. The approach to dividing assets fairly and appropriately does not necessarily involve an equal 50-50 split. When determining how to divide marital property and debts, the court evaluates several factors, including:

• The financial condition of each spouse,
• The potential business opportunities and earning abilities of each spouse,
• The age of each spouse,
• The extent of each spouse’s separate assets,
• The characteristics and value of the property in question.

What is Considered Community Debt in Texas?

In Texas, community debt includes any debt incurred by either spouse during the marriage, regardless of whose name is on the account. This means that even if only one spouse signed for a loan or credit card, both may be responsible for repaying it.

Examples of Community Debt

1. Credit Card Debt: If either spouse uses a credit card for purchases during the marriage, this debt is usually considered community debt.
2. Mortgage Loans: Any mortgage taken out during the marriage is typically community debt, even if only one spouse is on the deed.
3. Car Loans: If a car is purchased during the marriage, the loan for it is considered community debt.

What is Considered Separate Debt in Texas?

Separate debt refers to any debt that either spouse incurred before the marriage or after separation. It also includes debts that are explicitly designated as separate in a prenuptial agreement.

Examples of Separate Debt

1. Pre-Marital Debt: Any loans or credit card balances you had before getting married.
2. Post-Separation Debt: Debts incurred after the date of separation.
3. Personal Loans: If you took out a loan in your name only and used the funds for personal expenses, it might be considered separate debt.

A prenuptial agreement often delineates which assets are considered separate and which are community property. It can also declare that debts incurred during the marriage are to be treated as separate property.

However, it is important to note that merely having a debt under one spouse’s name does not automatically classify it as separate. If the debt was incurred during the marriage, it is generally regarded as community debt.

Hidden Assets and Falsified Debts 

Some individuals may try to hide assets during a divorce to prevent them from being divided, but this is illegal. Instead, consider divorce mediation or collaborative divorce, where both parties work together to agree on how assets and debts should be divided.

Additionally, some might attempt to manipulate their financial situation by claiming they have more debt than they actually do. During the divorce process, both parties are required to complete financial disclosures that include a wide range of financial data, such as:

• Income tax returns,
• W-2 or 1099 forms,
• Schedule K-1 documents,
• Details on health and medical insurance policies,
• Information about property deeds and liens,
• Current housing costs like rent or mortgage payments,
• Retirement or pension plan details,
• Statements from bank and credit union accounts, including savings and checking accounts.

Engaging a divorce lawyer and being transparent with them is important to keep your best interests and achieve a positive outcome with your divorce case.

Debt Division Options in Texas

How is debt divided in a divorce in Texas? The process can vary, and a family law attorney can help you find the best solution. Possible ways to divide debt include:

1. Splitting debt and property equally;
2. Selling joint property to settle outstanding debts;
3. Assigning specific debts to each spouse based on the community property they retain (for example, a car loan staying with the person who keeps the car);
4. Allocating a larger share of debt to one spouse, especially if that spouse does not have primary custody of the children.

Courts typically approve any agreement spouses reach together. If no agreement is possible, the court will conduct a hearing to decide the division of property and debts.

Marital Debt and Creditors

It’s important to understand that creditors are not bound by the divorce decree. Even if the court assigns the debt to one spouse, both might still be legally responsible if both names are on the account.

Dealing with Creditors

• Refinancing Loans: You may refinance joint loans to remove one spouse’s name.
• Closing Joint Accounts: Close any joint credit accounts to prevent further debt accumulation.
• Communication: Inform creditors of the divorce and work out payment arrangements.

Contact Our C.E. Borman Divorce Attorneys for Help in Dividing Marital Debts

Going through a divorce involves significant considerations and, sometimes, modifications when necessary. Engaging a knowledgeable law firm can ensure you receive a fair settlement and that you achieve peace of mind while focusing on your future.

Our team of Bryan, Texas, divorce and property division attorneys at C.E. Borman possesses the necessary skills to clarify your rights, make sure your divorce documents are prepared, and offer tailored advice on dividing property and debts. 

Contact us at 979-200-4725 to talk about your situation with one of our attorneys.